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February 6,2009

  • Rules of FICO'08 in 2009, Pt.2

     – Small stuff separated from big stuff.

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    The credit card score range spectrum will be sectioned off into three categories: Fair; Good; or Excellent. The biggest change is the fairness in ‘weighting'. No longer will one-time burps knock you down. No longer will notorious violators enjoy the same benefits as the responsible, but as not-perfect credit card holders. History will be viewed more dimensionally so as to separate the violations from the honest slip-ups. It's all good news for the just. Credit card lenders will win, too. They will now be better protected from being over-exposure to risk as the deeply are now. Here are some of the exciting changes:

    Little mistakes have less consequence: The practice of slamming a credit card consumer for an occasional slip-up will no longer destroy a credit rating. A more comprehensive view of a consumer's credit card history will be applied. So a pattern of late payments will weigh much more heavily than one or two over a longer period of time. This is a big change and should provide much better treatment to the tens-of-thousands of frustrated and responsible card holders. These people were rightly upset with the harsh treatment for minor slip-ups and should be greatly relieved by this new change. Now, a good credit rating will remain primarily intact, when occasional minor slip-ups occur.

    Insignificantly small debt collections less significant: Debt collections for less than $100 will have much less effect than before. Library late fees and parking fines will no longer be placed on the same level as major credit card defaults. In fact, these will not even be factored into the new FICO Score. This will resolve, not only the inequity but, also stop the abuses of so many collection agencies who like to divide one large debt into several small debts in order to file them as multiple defaults with the credit reporting bureaus for what they, themselves, deem as being a single bill when a consumer tries to negotiate payments. Instead of a single ‘red mark' in a credit report, these show up as ten ‘red marks' by being split up.

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